Fair Work Legislation Adjustments in 2024

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Australia’s employment landscape is poised for substantial changes in 2024 due to proposed amendments to the Fair Work Act.

These modifications, originating from the Fair Work Legislation Amendment (Protecting Worker Entitlements) Act 2023 and the Fair Work Legislation Amendment (Closing Loopholes) Bill, redefine several essential aspects of workplace rights and obligations.

What are the changes to the Fair Work Act?

Right to superannuation in the National Employment Standards

Starting from January 1, 2024, there is a new regulation regarding superannuation in Australia. According to this law, employers are required to pay superannuation based on the employee’s ordinary work hours, emphasizing that superannuation is a fundamental component of the employee’s overall compensation.

This change aims to ensure that employees, regardless of their job nature, receive fair and equitable superannuation. Employers are obligated to adhere to this rule, paying the correct amount promptly. If employers are uncertain about their obligations, consulting with an employment lawyer is recommended.

While existing rules already address this aspect, these new regulations underscore the importance and simplicity of ensuring that employers fulfill their superannuation obligations accurately.

Changes to unpaid parental leave

Starting from July 2024, amendments to the Fair Work Act enable employees to take unpaid leave for the arrival of a new child. These changes align with updates to the paid parental leave scheme implemented in July 2023.

Under the new provisions, employees now have greater flexibility to take unpaid leave for caring for their new child. Previously limited to 30 days’ leave in the first year, employees can now take up to 100 days’ leave at their discretion within the two years following the birth or placement of the child. Additionally, anticipating parents can take unpaid leave up to six weeks before the expected due date.

A previous restriction that both parents could not exceed eight weeks’ leave has been removed. This means that both parents are now eligible to take up to a year off whenever they choose within the first two years after the child’s birth. If additional time is desired, each parent can apply for an extra 12 months after the initial year, allowing both parents a total potential leave of up to two years.

Authorised employee deductions

Effective from 30 December 2023, a new law permits employees to authorize recurring deductions from their salary. This allows employees to have a consistent withdrawal from their pay, even if the amount varies periodically. The agreement remains valid regardless of whether the deduction amounts increase or decrease. Moreover, employees can easily cease these deductions by providing a simple note to their employer.

Previously, employees had to sign a new form each time the deduction amount changed. The elimination of this additional paperwork simplifies the process of managing salary deductions.

While employees retain the option to agree to specific deductions, these must be beneficial to the employee and documented in writing. This new law provides employees with more choices, ensuring their interests are safeguarded while granting them greater control over their salary.

Protections for migrant workers

Migrant workers in Australia have consistently enjoyed the same workplace rights as other individuals, irrespective of their migration status. A recent regulation aims to provide clear guidelines on this matter.

The new regulation can be summarized as follows:

  1. Migrant workers retain their rights and entitlements, unaffected by their migration status, as per the Migration Act 1958.
  2. Breaching a provision of the Migration Act 1958 by a migrant worker does not impact their employment or service contract.

This principle holds true even in situations where a migrant worker:

  • Violates a provision of their visa.
  • Lacks permission to work.
  • Does not have the right to reside in Australia.

Casual employees in the black coal mining industry

The recent amendments to the Fair Work Act focus on guaranteeing appropriate compensation for long service to all employees, including those employed on a casual basis, within the coal mining industry.

Under these changes, when compensating workers for their long service leave, they will also receive additional remuneration earned during their tenure as casual employees.

Furthermore, a novel method has been introduced to allow casual workers to accrue long service leave gradually, enabling them to accumulate this benefit over an extended period.

Introduction of a new Federal criminal offence of ‘wage theft’

Starting from January 1, 2025, the Fair Work Act 2009 will incorporate a novel federal criminal offense, termed ‘wage theft’. This legislative addition specifically targets employers who intentionally neglect to remunerate their employees in accordance with the Fair Work Act and enterprise agreements, with employment contracts being excluded from its purview.

The wage theft law zeros in on deliberate underpayments, with employers only found in violation if they purposefully withhold the rightful compensation of their employees. Inadvertent errors are not considered offenses under this new legislation.

The penalties for contravening this law are stringent. However, the legislation also outlines a potential safeguard for employers to evade penalties by entering into a ‘co-operation agreement’ with the Fair Work Ombudsman. Employers seeking more detailed information should seek advice from an employment lawyer.

Increased maximum penalties for breaches

The proposed amendments indicate a substantial increase in fines for a single violation of the National Employment Standards, a modern award, or an enterprise agreement. For large corporations, the maximum penalty for breaching regulations concerning equitable pay or agreements could soar to $469,500, while individuals could face fines of up to $93,900 – a fivefold increase from previous levels.

In cases where an offense involves the failure to pay employees their rightful remuneration, the penalties escalate significantly. The fines can be five times the standard amount or three times the underpaid amount. Furthermore, amendments will refine the criteria for determining when an offense is considered serious. If someone is found to have known or been grossly negligent in failing to pay employees correctly, large companies could incur fines of up to $4.695 million.

These more stringent penalties are slated to take effect on January 1, 2024, contingent on the successful passage of the new laws.

New definition of casual employees

The proposed Bill introduces changes to the definition of the term ‘casual employee,’ focusing not only on contractual provisions but also on the actual nature of the employment relationship. If an employer consistently offers work and the employee regularly accepts it, the classification may shift to permanent, irrespective of variations in tasks each time.

To be legally considered a casual position, the employee must receive a noticeable casual loading for the casual work, even if this aspect is not explicitly outlined in the contract.

The Bill also grants casual employees increased agency. A new ’employee choice’ mechanism is established, allowing employees to declare if they don’t meet the revised definition of casual. Employers can propose transitioning casual workers to permanent status, and employees have the right to request this change. If agreed upon during the interview, the employee will be designated as permanent. Otherwise, the employer must provide a detailed explanation for the decision.

Introduction of an obligation on labour hire providers

The proposed bill seeks to establish equitable compensation for workers employed by labour hire companies when providing services to another business. If a company supplies workers to another entity, they must remunerate them at least a ‘protected rate of pay,’ subject to a specific order from the Fair Work Commission (FWC).

The ‘protected rate of pay’ ensures that these workers should receive compensation equivalent to what they would receive if directly employed by the company they are rendering services to, encompassing bonuses, overtime, and allowances.

The FWC has the authority to determine a distinct ‘protected rate of pay,’ not solely based on the company’s regulations but possibly derived from other agreements the company has engaged in. There is an exception for short-term assignments, typically lasting less than three months, unless otherwise determined by the FWC.

New meaning to the independent contractor relationship

The Bill outlines criteria to determine the classification of individuals as either an ’employee’ or an ’employer.’

Under these proposed changes to the Fair Work Act, the actual circumstances of the employment relationship are crucial, extending beyond the content of the employment contract. Factors such as the contractual terms, practical implementation, and other relevant considerations play a pivotal role in determining the nature of the relationship.

These amendments seek to revert to the previous Common Law definition, which was overruled by two High Court cases in 2022. The High Court decisions had asserted that the status of an independent contractor arrangement should primarily be assessed based on the contract.

It’s important to note that this revised definition is specific to the Fair Work Act and does not extend to other employment laws, such as superannuation or long service leave regulations.

Changes to Awards and enterprise bargaining

The proposed Bill aims to revamp the dynamics of agreements within companies, introducing new mechanisms for determining aspects like flexibility, discussions, and dispute resolution in agreements between employees and employers.

A significant shift is the potential increased involvement of the Fair Work Commission in shaping these terms, akin to the creation of modern awards. It’s important to note that the model terms suggested by the Commission will not supersede existing terms agreed upon within a company’s agreement, provided they adhere to the Fair Work Act regulations.

These changes could impact businesses in various ways:

  1. The Commission might impose stricter regulations on employer-employee communications or limit flexible work options, influencing the operational dynamics of businesses.
  2. Franchisees from the same company could collectively create an agreement, streamlining the agreement process.
  3. Employers within these franchises could propose changes without the requirement to prove that each employer has a minimum of 20 employees.
  4. A new framework is proposed for digital platforms and transport businesses to negotiate work terms with workers through collective agreements.
  5. The bill also outlines changes in how employers under a large agreement can formulate a new agreement specific to their company.

Other IR reforms

If enacted, this Bill is poised to bring about significant alterations in workers’ rights and reshape the dynamics between unions and employers. While the final version of the legislation is eagerly awaited by employment law firms, here are some anticipated reforms:

  1. Enhanced Powers for Workplace Delegates: Workplace delegates may gain increased authority to represent workers, engage in discussions on work-related matters, access workplaces, and receive training pay. New agreements would be required to safeguard these rights of delegates.
  2. Restrictions on Employers: Employers could face new regulations, preventing them from impeding delegates without a valid reason and prohibiting them from providing false information to delegates.
  3. Streamlined Union Investigations: Unions would be empowered to investigate workplace violations without the usual notice, provided they obtain special permission.
  4. Protections for Gig Workers and Digital Jobs: Gig workers and individuals in digital jobs lacking bargaining power, receiving lower pay, or having limited control over their work would receive new protections. These include minimum standards and safeguards against unfair dismissal.

If these changes are passed, they are expected to come into effect on 1 July 2024.

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